Look Inside A Real Estate Investment Fund

The best plan in the world is worth zero. If you can’t execute it. And that’s what asset management is all about. 

Have you ever wondered what a large real estate investment company actually does? What does their day look like? What departments do they have as a company and what key pieces make up the larger ever growing full-time investment business.

 Today, we’re going to get an insider’s perspective on how a real estate investment company is set up, how it runs, the different departments and the different strategies that we use. 

At Saint investment Group, we currently have 150 million assets under management today, and we are raising another 100 million, currently.  I create content like these blog posts  because investing is the ultimate way to personal freedom and I want you to have access to this information. 

To start off,  let’s define exactly what a real estate investment company actually does.

 First, they identify an opportunity and a strategy for that opportunity that would bring high returns or would offer the investor something special and unique in the marketplace. 

Next they market to investors. They explain what the game plan is, what their strategy is, and they raise money from those investors that do believe in what they’re doing in the game plan they’re moving forward with. 

Third, the real estate investment group purchases the asset, executes the game plan and delivers that value to the investors, the investment fund or the firm or the investment group makes a small sliver of that depending either on the front side or the back side of the deal. And that’s how they keep their doors open as well. Now, with these steps, a real estate investment fund does this rinse and repeat over and over, an infinitem. They’re going through this same exact process. Pieces of this will inevitably change, whether it’s the assets themselves, different markets, surely the team is gonna evolve over time, but these are the main pieces. This is the main process that every single investment group fund, firm, et-cetera goes through. 

Now, what is a real estate fund, firm, syndication? What exactly is it made up of what makes up the team behind the investment? That’s what we’re gonna be focusing on today. And there are three pillars to this as well. The first is asset management and fund management. The second is, acquisitions it’s locating and actually acquiring the assets. The third is, capital raising. It’s bringing the money into the fold, to invest, get the returns, and to start and continue that entire process.

 Let’s jump into item number one, which is asset management slash fund management. This is the best place to start because this is the literal backbone of the entire operation. If you want to think about anatomy, this holds everything else up, it being healthy, making sure that everything has the support it needs for the body, AKA the real estate investment firm or company, et cetera, to perform at its optimal levels. 

Skill wise. The asset management side of the business primarily has more COO skills. It’s gonna have things like operations, accounting, management, property management, understanding, and maybe even some experience, compliance, legal, collections, AKA accounts receivable systems for everything top to bottom to make sure the trains are running on time and both  top level strategy and execution. As you can see, asset management really is the glue that holds everything together. Without this piece, what happens is you have isolated pieces that are really more of niche operations rather than a whole real estate investment business on its own. How do you know that asset management is doing what it’s supposed to? What does a good job look like? Above all else,  asset management’s job is to execute the strategy that they have come up with. This means that staying on track, staying on deadlines, staying on timelines, because time is money. 

When you have a fund that is variable, some funds range – we have a one year lockup period for instance. That’s very short. So, that means we need to hit the ground running quickly. Other funds have maybe a five or 10 year lockup period. So, what that means is, that game plan is a longer term strategy, but it’s a lot less flexible for the investor, but also a lot less flexible for the asset manager. That means they need to nail it down from the beginning because a 10 year game plan, if you mess up for a period of time, pushes those timelines further and further back. You need to jump on it immediately. Also, when you’re fighting market conditions, AKA markets are always gonna go up and down. Jumping on this quickly allows you to get ahead of the market and see any changes that may be coming because you have boots on the ground in your operations, and they have ears very close to the street of what’s going on in their properties. 

Local markets. Asset management will also be the oversight of the actual property managers, the property managers, as you know, if you want to think of hierarchy all the way from tenant to cash investor slash owner, you have the tenant, you have the property manager, you have the asset manager, and then you have the investor and the top line management. From that tenant, they interface directly with property management. That means property management collects all of those calls and interfaces and discussions. So, for things like a multi-family building, that will be a lot of discussion. For an office building, it will be a good amount of discussion. Self storage will be tons of tons and tons of discussions. For things like single tenant industrial, there might be less communication from the 350,000 square foot tenant in the property manager, but those communications are very high level and they are very, I don’t wanna say risky, but there’s a lot more on the line. 

If somebody’s leasing a $2,000 a month apartment, and you have a hundred of those tenants, you could lose one and kind of mismanage that a little bit. If you miss something like Amazon in your warehouse, you’re gonna have big problems. If you mismanage that, there’s going to likely be a lot of repercussions for handling that poorly. So, property management is very important and performing the way they’re supposed to is very important. Asset management has oversight above that and is always checking their work and making sure they’re on the big tasks as well. Great asset management is also all over collections. If something is running behind, they know about it and they have a game plan of how to get that money back and get those collections moving or an eviction. They are all over making sure they’re pushing the top line at all times to make sure that investment is performing at the best of its ability. 

This also includes when you’re looking at financial statements – this is the asset manager’s job. That is the literal script of what they’re doing. It tells the whole story. Expenses are the next item in there. Asset management must be positive to manage expectations with expenses. That means they’re always trying to find ways to sharpen the pencil on this so they know very good market rates for things like electricity, for water, ect. for the number of tenants or the size of the building so that they know if they’re being way overbuilt. If there’s an underground leak under the property that they don’t know about, or the water bills going crazy, or if someone is siphoning, power, electricity, water, etc., a good asset manager will know just by looking at the numbers and understanding the market rates in the area. They’re also getting competitive bids to keep pricing down. 

They’re not just giving it to the craziest highest price, assuming value from that. And most importantly, it’s that systems are airtight. There’s no holes in the bucket where you’re gonna wake up and say, who missed this important piece? Keeping the trains running on time at all times is the number one goal of asset management during their execution of the strategies. Now, in our long experience in real estate, we have a combined experience of  over 60 years for our top management team. So, in our long experience of real estate, we’ve seen a lot of bad asset management. Let me share a list of our pains from the past so that you know what doing this job poorly looks like. 

The first is just simply incorrect numbers. 

When you have to look at the financials and they simply can’t be correct, this is a red flag. Numbers should always make sense, and when you find out that your asset management is not managing accounting appropriately, and you as the C level executive cannot even get accurate numbers, this is the number one sign that there is a major issue.

 This is quality control completely off the rails. If you’re the top executive in the company, it’s your role to get this fixed. What it tells you is that your asset management is having major problems. If you start seeing things on your aging or delinquency reports that are 30, 60, 90 days late, what that tells you is that your asset management is not pounding the phones to get the work done that they’re supposed to do to run this tightly. 

The next thing that happens when things are off track is you get into meetings with your asset managers, the people that are the boots on the ground, making sure the performance is happening and you ask them, ‘what’s up, what’s up with the tasking? What’s up with the numbers? Why is this off? Why is that off?” The answer you get is the next big indicator of where they’re at. If they’re straight up with you and say, “look, I just had a kid. I have a family member in the hospital. Something major happened. The accounting department just moved offices and the head accountant wasn’t it”, whatever it is, if they can at least be straight up with you on what’s going on and say, ‘we messed up, this is the reason and we’re going to fix it’. Okay, great. The number one thing that we’ve seen that is the red flag is when they straight up lie or the excuses are there and not the results. 

If they won’t even admit that there’s a real issue and suggest you shouldn’t be upset… That’s a huge red flag. If they don’t respect the accounting and the numbers, asset management is having problems. A few other key examples are bad strategic execution, or even strategy altogether. It’s very difficult to squeeze out the performance that you need to for your investors. If your asset managers don’t see the big picture, or they don’t even really understand the strategy – even timelines are regularly getting kicked back –it is a really bad sign. It means that they’re not accurate either on their prediction of when they can get things done or they don’t really understand the processes involved. Both are not highly-proficient-type-issues to be having in asset management, not reviewing accounting regularly for strategic improvement areas. 

At the end of the day, It means that they’re kind of being lazy with the numbers and not trying to push performance; mix that with poor communication and you have got an UN-ideal situation to put it lightly . If you can’t get the details of what’s going on, or you can’t get clear stories, that’s a big problem from the asset management side. 

That said, asset management is the backbone. If I’ve said it once I have said it a million times. It will make or break all of your deals. 

The best plan in the world is worth zero. If you can’t execute it.

 And that’s what asset management is all about. Sadly, asset management is also often considered the least sexy of the departments because it doesn’t have a whole lot of marketing and sales involved. It’s much more on the operations side. This is a major miss by the real estate industry and investment industry. Asset management is an absolute gem that you must have. 

Asset management is truly the core pillar. If you don’t have it, your deals will fail. 

The next pillar is acquisitions. This is sourcing deals, finding deals, analyzing deals and purchasing deals, and bringing that amazing deal to a safe landing on the runway. 

Great acquisitions knows when to push in negotiations on a purchase, when to fold, you know, say completely no to the deal or when to find something in between and say, “Hey, we’ll give you that. If you give us this.” Navigating this purchase process is an absolute must for your acquisitions team or for a team that you’re investing in because many things come up in escrows, problem resolution and negotiation, where it’s a win-win is something that is very easily glossed over somebody that finds the best deals, but can’t work through the biggest problems is not as valuable. They must navigate escrow and be the leader of that process to make sure it gets for a safe landing. 

And really part of the job is sorting through efficiently hundreds of deals at a time. You have infinite investment options in the real estate space. There are always deals. I don’t ever want to hear anybody say that there are no deals. The problem is always too many deals. Now there might not be a lot of great deals. I would agree with that statement, but part of acquisitions and part of that department is that they must be going through consistently, hundreds and hundreds and hundreds of deals to find the absolute gems, the diamonds that when you polish, they have the best return for everybody and everybody can be very successful. They must do this with their analysis, their numbers, and their strategy included on each submittal for a deal. You can’t run things by, I think this is good. 

You must have a systemized on track, same acquisition review process every time. All right,  so what does acquisitions look like when it’s not doing a good job? 

The simplest answer is you’re paying above market for market deals. If you’re finding these deals on co-star or LoopNet or any other listing service, and they’ve already been shopped by all the other buyers and they’re still up there… then there’s a problem, most likely. Your acquisitions team – their purpose is to be finding the best opportunity. If they’re not bringing you things that are off market, that is a huge issue. It is also a bad sign if they are getting hammered in negotiations or during the escrow process. They are the ones who are supposed to be bringing this whole deal together and making sure that things go smoothly all the way to close. 

One of the things that you commonly see that has huge implications for being a poor acquisitions director is not having a good network developed; sometimes it’s not enough years in the seat, or not enough years in the industry. 

People don’t know you as that acquisition’s individual, but this has impacts on things, everything from pricing to early information on deals. I can’t tell you how many times, having a good relationship on the acquisition side with the broker that has benefited the deal or how many times that has landed a successful transaction from across the board – whether it’s bad news that you get from the broker where he says, ‘look, you know, between you and I, there’s a bunch of issues here”. Sometimes that can actually give the seller confidence with you, knowing that because you put in your offer, even if it’s a little bit lower with firm confidence saying, “Hey, look, I know there’s some hair on this.I know there’s some issues coming up, but we know about them. We will make this offer with the knowledge of those.” That’s actually a big actual sigh of relief for the seller because the mentality is “Whew, all the worst things have already come to light. So, now I know that the offer is serious”. 

Sellers might still shop you or squeeze out the best price – but it’s worked to our advantage many times as the buyer. Others are commission based – can you imagine a worse structure?

If you’re the C level executive of a fund or a syndication, etc, can you imagine a worse syndication model than having your acquisitions director being paid commissions on acquisitions? I see this over and over, but I always think about the bias that the individuals have. 

You’re giving them the bias. 

You’re training the bias by saying, “Look, the more deals you close, the more money you make.”

But that is not what we’re here for. We’re here for quality deals, not a quantity of deals. 

If you’re going to build in a commission structure or a performance bonus structure, make sure it’s based on the performance of the assets they choose so that they spend a little time making sure it’s the right asset and not just filling the need of something getting purchased just to illustrate this point that the acquisitions director and acquisition team needs to be pushing more off market and needs to be looking for things that aren’t just on costar or our Loopnet. 

Here are some numbers that illustrate this perfectly: over the last 30 years, multi-family real estate (and I’m gonna pick on multi-family because it’s very common in many of the entry level or earlier funds) Multi-family real estate has generated on average for the last 30 years, 15.7% per year. 

Those are great numbers and  very exciting numbers for many investors, especially when you think about all the other advantages that come along with that – particularly passively. Now think about that number and then think about the standard fund model. The standard fund model is five to 10 years holding that capital, the investor capital and squeezing out those returns and timing it for the best time to sell those assets or asset. Right? So, if that’s the case, the average fund probably quotes in the multi-family space, especially the more entry level funds about 12% to 16% is very commonly quoted.

 But think about that. If the average return is 15.7% and the average fund quotes 12% to 16%, then those that are quoting around the 16% mark. Wow, they’re quoting more than the average return an investor would get. 

If they went and bought it themselves at the lower end, that 12% number that’s actually just showing it exactly, probably around what the fund would make and then paying a market return out to the investors. So, there’s actually a big difference there between some funds on the 16 or higher percent return. And then that 12%, because the 16 and higher percent return you actually as an investor, you actually as an investor are better off investing in a fund and doing little to no work and making higher returns in those sophisticated funds, then going for a 12% fund, that’s still gonna hold your money for five to 10 years and you’re actually making below market.


But what those high end high quality funds have in common, is that they have good acquisitions because if you can beat the market, aka that first investor is gonna get 15.7%, but the fund would get them 16% or higher percent. 

That investor would be crazy not to give all that money to the fund and make more money for a passive investment, right? That 15.7%, if they went and purchased the property comes with a wide variety of management, AKA all the asset management we just went through, that’s managing a team – building a team, managing property management, boosting returns, trying to find the strategies involved that may take decades to really fully understand. If you can make more money passively, how could you not take that? 

That starts with acquisitions – getting off market above market returns because you’re paying below market pricing. The implications of this are huge – over and over and over and over. I have mentors that are fantastic acquisitions guys, and that has been a huge blessing in my career to be able to learn from some of the best. What they say, again and again, as a cornerstone of their business, is that the money is made on the buy. 

I showed you an illustrated example previously and I cannot overemphasize how important acquisitions are, now. I gave you an example of what funds would look like being great at acquisitions or even being above average at acquisitions – where they can offer great returns to investors that are oftentimes better than the investor would get on their own purchasing the property. 

Let me give you an example. I don’t want to talk poorly about Grant Cardone, in any fashion. Truthfully, I have so much respect for Grant Cardone. I think he revolutionized investment real estate in a major way, but I’m gonna dig into his model a little bit from an industry veteran, who’s been around a long time, about Grant who has scaled to truly atmospheric levels.Grant is incredibly successful, but I’ve always been interested in his numbers. Grants numbers are actually not competitive in the marketplace in many ways, from the deals that I’ve seen, of course I haven’t seen them all. 

There might be amazing deals out there that I’m not privy to or invite only, etc. for only his top investors, but the ones I’ve seen have not been the most competitive. 

Now on one side, you can be really negative and just say, “Grant is burning investors” or “Grant doesn’t know how to do acquisitions at a high level.”

 I don’t agree with that. 

I do not think Grant is not sophisticated or doesn’t know acquisitions – I believe what Grant’s doing is strategically using his strengths to offset some things in his company that might be a little less strong. It means that he’s playing to his strengths in a very deliberate and effective way. Grant, with the history of building sales teams and being an effective salesman himself, has clearly set a whole new high end benchmark of raising capital. 

 Many of my mentors hammer the phrase, “the money is made on the buy side”.  I also have mentors on the other side of the fence that have a different opinion with equal success in real estate with equal years in the business. And this is the other quote – 

 “is the money in the deal, or is the money in the money?”

Now think about that, right?

 We’re transitioning into part three of the three pillars of a successful real estate investment company.  I’m transitioning with an example from one side of the coin to the other.

 If some people hold the opinion that the ‘money’s not in the deal, the money’s in the money’, what does that mean? That means the value, in many cases, from a world class capital raising perspective, can bring value to the investor and to the investment group by raising a lot of money and not that they’re the best acquisition people in the world, but because they’re doing such high end purchases for properties that other groups can’t afford, that they’re purchasing things that have naturally higher returns, because the air is thinner. 

There’s not as many groups that can compete for the same sale if the numbers are so high.

 Now, again, to return to Grant Cardone, as an example – he buys a pristine class, hundreds of units. There’s only several bidders on any of these deals. So, I don’t know his exact gross returns, but what I can tell you is, I’m positive that Grant’s capital raising ability gets him access to returns that many other investors wouldn’t have – because he’s able to buy deals that are just bigger by default. 

As a recap:

If acquisition strength is missing, you will have lower returns, less competition in the market and less ability to acquire, as-needed, for your fund or your syndication. You may have to pay higher fees along the way, like brokers fees, double commissions, finders, fees, etc, all in all. 

It might be an extreme example, but there’s times that certain funds are just priced out of the market. Why? Because their fund model and what they promise to investors in their structure literally just does not work in some markets if they don’t have access to products and assets that meet that criteria. 

Now, success as an acquisition model, if this is what it looks like, can extremely boost the returns of the fund. It can make a huge amount of value for the investors and they can have access to things that no one else would. The acquisition person is not just evaluating markets that they have the best connections in, but is also sniping out markets with data analysis, economic analysis, trends of movement and business growth, trends of income growth and household growth, and using all the major metrics to understand which markets are doing great and which should be thriving in the future. 

With these systems in place, you can move faster on your acquisition side, because it’s the same routine every time. That gives you the ability to move faster than these other groups who may have slow purchase systems in place, giving you an advantage with any broker you deal with. 

Part three of the three pillars of a successful real estate investment company is capital raising. 

If you want to think of the analogy of the body – capital raising is the lifeblood of the entire company. You must have capital flowing in and out of the company into deals  and out of deals, back to investors into the investment company, to make sure that bills are getting paid. Everybody’s happy and motivated to continue their success. Overall, having that money circulate means the health of the investment group overall and things are working well. 

What skills do you need for successful capital raising overall?

This is gonna be more of a sales and marketing approach – mostly on the sales side and the sales systems. Because this will deal a lot with investor relations and a full funnel on the sales side, you have to have your full sales processes set up a complete sales funnel. You need to have people on the phones that are able to answer questions, who provide great information and help investors through that sales process. From a C-level executive, it’s gonna take scaling your team, training your team, systemizing your sales team. On the marketing side, it’s to bring people in the top of the funnel to bring them in with the knowledge and the interest and qualifying the leads beforehand, to make sure that when they do call you or you do get in touch, you’re the right fit for them. 

Telling the brand story, communicating your value to your investor base, and then also explaining the important things like the financials, the numbers, the returns, the expectations, etc, and explaining those very well so that a prospective investor is going to know if it’s a good fit and they can do some of the analysis on their own, is always important. 

By the time you get through everything, it feels great – like a great merger of two parties. 

First off, a good sign of a professional capital raising team for a real estate company is just being able to actually raise the capital. This is a big hurdle for many companies on their own. That’s why there’s an entire industry of people that are only focused on just raising capital – they raise capital, they help these other companies, etc. There’s many successful people and companies that are great options. 

If your company can’t raise capital, then you must identify your deficiency in capital raising. You must be able to make your raises or you’re gonna piss a lot of people off on the acquisition side when you can’t deliver and burn a lot of bridges with both brokers and sellers.

 Other good signs are being able to raise that money at fair rates – if you promise a million percent returns, you’re gonna have a lot of investors lined up, but if you can’t perform on that or if your cost of money is so high or even you make that hurdle with enough of a buffer in case things go wrong, which they inevitably do, then what happens is you are not competitive with your money and are not competitive with your capital raising enough to bring in enough interest from banks, investors, etc, to be able to get that cost of capital down so that you’re more competitive in the marketplace. 

It’s also maintaining relationships with your investors, having great updates for them, making sure that when they ask questions, you have the answer or can find it and get it to them, making sure they understand the storyline of what’s going on in your fund or syndication or a specific property and you can convey that to investors, to give them the confidence that you know, what you’re doing and their money is in good hands. Those are kind of like the entry level must haves. If you’re gonna compare your capital raising like a benchmark of good enough.

 Let’s talk about a few of the attributes of great capital raising in house. 

Keeping key investors warmed up, meaning they’re in the loop on deals and they are ready to invest larger sums so you have some flexibility in your raises. This is an art more than a science – but it’s keeping very close connections with the key individuals so if there’s an opportunity and the price goes up or price adjusts, et cetera, they can move quickly. Managing tightly. 

Your investor retention is also a level 10 skill for capital raising.

 If you have very high retention and very high reinvestment rate, you are multiplying your success as a funded investment group over and over and over and over. Your investors are always coming back for more because you are delivering tons of value. That’s huge. In addition, I’ve heard this breakdown be the Holy Grail of the capital raising side. We don’t have this exact breakdown – ours looks different – but here’s one that I’ve heard many people say is just the perfect situation. That’s 100 high quality, high net worth retail investors that are interested and ready to invest at any time you need them. The second is 10 family offices, high level investing groups, groups that are ready to invest that invest full time that want to invest with you, that you have relationships. The top of the pyramid is one institutional partner that is ready to go. One institutional investor, 10 family office investors, and 100 retail investors, high quality retail investors. 

If you have that in place, you will never need money again. 

Some of the bad signs to see from a capital raising group or partner or a department – they can’t raise the money plain and simple – that means they can’t deliver. If they can’t raise the freaking money, then they are not doing their job. Another one is – they can’t manage different size raises. This is critical because not every deal’s gonna be the standard 5 million, 10 million, 15 million, whatever the purchase price is, it’s never to the penny, every single deal is going to vary. And you as an investment group, can’t just purchase properties down to the penny every single time. 

Your capital raising department or individual needs to be flexible, needs to have the relationships available to make those varied amounts of raises when needed over promising and under delivering to get deals done. This is really shortsighted, but I do see this a lot. It’s basically promising the moon just to get the money in the door. 

That’s really scary, that’s really difficult. And that leads to very short relationships and a lot of pissed off investors. 

When I’ve seen other groups do that, thank God we’ve never had this issue in house, but it’s a very short runway and a lot of problems are at the end. So, be very careful if you see somebody with these tendencies to over promise and under deliver. 

That will mean low investor retention rate. 

Like I said before, retention rate is a very key metric on the capital raising side. 

If you see people not coming back, you really need to analyze. There’s times it might just be you screwed up your returns, or you have really bad communications with investors. It could be many different things, but you always gotta look at the capital raising side too because they really need to be managing the expectations and the communication with investors. 

In our experience, we went through COVID with investors… Can you imagine having the conversation of saying there’s a global pandemic and there’s a million things that we don’t know, but you can absolutely trust us?? And we absolutely won’t even miss a payment to the investors?? 

That takes a lot of confidence and faith from your investor base. Thank God, we’ve maintained that, and we paid our investors on time and we paid our way through it. Everybody was happy. We did not lose any investors during that time. 

But there were other groups during the COVID period that didn’t have answers and dug a hole, put their head in the sand.. aka they didn’t get back to their investors. They didn’t tell the story. They didn’t share their game plan. They gave their investors no confidence to reinvest with them. 

By the time those funds ended, the investors wanted out. They wanted nothing to do with those  guys. They couldn’t figure it out, couldn’t communicate the problems they were having, and what solutions they had lined up for them. Additionally, if the capital raising department or individual needs a significant amount of time where they need a huge lead time to put everything together, it’s unrealistic  from the acquisition standpoin; there’s times deals fall on your desk and you have to make a decision quickly. 

You have to put the deal together very quickly. If the capital raising side is so inflexible that they can’t do that and they can’t work with the acquisition side to get deals done – That’s a huge red flag. Now here’s the question – because you can’t do everything perfectly –  what does a real estate investment group look like if they just outsource this? What are the options to outsource this?

The simplest solution is to pay a broker dealer. There are individuals that are 100% through extensive licensing that go out and raise money and place money. So you, as a fund, can contact broker dealers anytime to do this – the money’s a little expensive. It can definitely add to fees and definitely dwindle returns, but it is one option that some funds use. 

If your capital raising isn’t lined up overall, essentially just like that blood, if you don’t have enough blood supply in your company, your business is not gonna be healthy. It is going to flounder. That is why early startup funds are so scary for investors, because investors are smart and they understand that at the end of the day, something that’s just starting up might not have enough to make it. They don’t have the momentum yet. They might not have the systems. If they don’t have the money, they might not have access to the deals to pay the returns to investors and to offer their investors a world class experience for their money. 

Other times you’ll see funds pivot a little bit. Instead of doing just a straight fund route or a syndication with many investors, they have to take a deal.

They don’t like it, and they’ll move to things similar to joint ventures. There are many successful joint ventures out there. I have mentors that have scaled to billions under management using JV structures 100% of the time. Not too, discount that structure, but there’s also the time where a JV is sitting there saying “Hey, you got nobody else come gimme a hug. Let’s make this work ” and that’s a bad place to be. That means you’ve run out of options and you’re about to get a really bad deal – which is bad for you and your investors. That’s what it looks like when you don’t have your capital raising in order and you have to take the bad joint venture deal. 

I always advise if you can put it together and you can bring it in house, it makes the capital cheaper. and your company run more efficiently. 

I typically see it benefit the investor significantly when capital raising is in house, because it shortens the communication gap between asset management and capital raising – what’s going on, what the strategy is, what wins you’re having, etc. You need to tell investors to let them know what’s going on. 

The storyline of what’s happening with investments needs to be passed along and relayed to the investors. When it’s all under one roof, I see that it is very successful and I think it instills a lot more confidence in investors. When it’s in house, there’s a huge advantage of being able to scale that appropriately with your business growth. You run a huge risk if you’re doing a patchwork of capital raising models, where it’s private placement over here, bank financing over here, institutional, and it’s all,  joint venture, partially COGP, and you have all these pieces going in. 

It gets really complicated and runs the risk of putting the fund in a tough position where they have so many partners and there’s so many hands in the cookie jar, that it is difficult for the fund to run efficiently. Eventually, that impacts the investor experience, which is really the number one thing to this whole puzzle. 

To recap – an investment fund is an amazing model to bring a lot of value to many people. Primarily the investors. There are three major departments and there’s a million subsections of this. There are three main pieces to any investment group, syndication, et cetera – It’s asset management and fund management. Two is acquisitions and three is capital raising. 

If you have all three of these on track, you are in a great place to scale appropriately at a ton of value to the investor. 

If you’re an investor evaluating a fund or an investment model or a syndication, look for these three and try and understand how good they are at each piece. That will tell you, in broad strokes, what your experience with them is going to be. Are you gonna get higher returns? Are you gonna get your calls returned? Are you going to get on-time reporting that’s accurate and quality with a good strategy involved of what exactly they’re doing. 

Overall, it takes all three. Understanding them is critical, whether you’re on the investor side or the investment side. 

If you have any questions, please leave a comment below and thanks for learning with me today! 

Frequently Asked Questions:

What is a real estate investment fund?

A real estate investment fund is a form of mutual fund that invests primarily in real estate assets such as properties, mortgages, and other real estate-related securities. These funds enable investors to acquire exposure to real estate markets without physically owning or managing property.

What are some benefits of investing in a real estate investment fund?

Investing in a real estate investment fund offers several benefits, including the potential for regular income through rental income or dividends, the potential for long-term capital appreciation, diversification of investment holdings, and the ability to invest in larger or more complex real estate projects than an individual investor might be able to handle alone.

How are real estate investment funds managed and what are some strategies used by fund managers?

Real estate investment funds are usually managed by professional fund managers employing a range of selection and management methodologies for real estate assets. Diversification across numerous property kinds and geographic locations, rigorous study of market trends and property prices, and constant monitoring and rebalancing of the fund’s assets are frequent techniques employed by fund managers.

What are some key considerations to keep in mind when investing in a real estate investment fund?

Some key considerations to keep in mind when investing in a real estate investment fund include the fund’s investment objectives and strategies, its track record and historical performance, fees and expenses, and the potential risks associated with real estate investments, such as changes in market conditions or interest rates. It’s important to carefully review a fund’s prospectus and seek professional advice before making any investment decisions.